Employment figures released by the U.S. Bureau of Labor Statistics indicate that at 4.0 percent, national unemployment rates continue near their lowest level in more than three decades.
According to industry surveys, banks list low unemployment as the chief reason for difficulty attracting and retaining employees — a problem that has significantly increased in the past year. Over 60 percent of banks with assets over $200 million report difficulty in attracting workers and nearly 43 percent report difficulty retaining employees (Community Bank Competitiveness Survey). Banks initiating and expanding Internet services and e-commerce strategies have the added problem of competing for highly skilled IT labor, where there is expected to be a shortfall of almost 850,000 workers this year alone, according to a report issued by the Information Technology Association of America (ITAA). In 2001, it gets worse, when another 1.6 million IT workers will be in demand.
On-Line Banking to Soar
Already well-established in Europe, online banking is rapidly becoming a standard offering in the U.S. By 2002, 15 million households, or 12 percent of the market, will use online banking services, and banks are gearing up for the challenge (Tower Group). With customer retention in mind, the number of banks offering online services by 2003 is expected to increase 1,278 percent, or 13 times as many as in 1998. To effectively handle this boom, banks need highly-trained IT professionals to make the transition easy for both institutions and customers.
“Banks large and small are already hard hit by the labor shortage,” said Doug Merritt, CEO of Icarian, Inc., the leading provider of Workforce Management software solutions. “Now they must adapt to changes in their market brought about by the Internet — and compete for scarce IT professionals with many other industries. In my view, banks who are leading the way in offering online services are also those most open to changing their hiring and retention practices to suit the information age.”
Putting A Premium on Employee Recruiting and Retention
Institutions and companies willing to update hiring and retention practices to optimize on Internet efficiencies can net substantial competitive advantages. Using a shared, Internet-based workforce solution, companies can decentralize the hiring process and establish a company-wide collaborative process, thereby reducing the time it takes to hire overall and including line managers in hiring decisions. The same system can also help companies promote from within and maximize internal resources more effectively through online profiles that track employees’ interests, skills and promotion history.
To support major initiatives like these, and to stay ahead of competitors generally, banks seek talented IT professionals to complement their existing workforces. While banks are generally opting for outsourced solutions, to integrate new services they are bolstering in-house IT resources by adding more computer programmers and developers, and by scouting for tech-savvy executives to help make strategic decisions about IT investments. Industry-wide consolidation is raising the skill-level of bank employees generally, and employees at many levels must be trained to use marketing data obtained through IT sources wisely.
Responding to the challenge to attract prized programmers, some regional banks have reported success by revising their compensation guidelines and work environment, emphasizing job rotation and the satisfaction of meaningful work (Forrester Research). The willingness to adapt hiring practices to the labor market may be viable option for national and regional banks struggling to compete for limited resources.
Numbers Don’t Lie
The raw numbers underscoring the move to on-line banking and commerce are as relentless as they are compelling, Consumers will obtain 9 million loans and credit cards over the Internet in 2003 worth almost $167 billion according to Forrester Research, with mortgages accounting for the bulk dollar volume. By 2006, approximately 30 percent of mortgage loans will originate online, as compared to three percent last year (Tower Group).
Spending on IT services is rising steadily as more banks adopt IT and e-commerce strategies in order to reap the rewards of customer acquisition and loyalty, transaction processing and cross-selling. According to Datamonitor, overall bank spending on IT will escalate to $31 billion in 2002, a six percent annual increase from 1998. Increasingly, banks must also plan to fend off competition from non-bank Internet portals such as Quicken, MSN Money Central, Yahoo! and Excite, which offer a range of financial services and online comparison shopping.
Signaling the trend to invest in IT services and e-commerce opportunities, several of the largest national banks have recently announced their plans to expand service offerings and B2B ventures through the Internet. This spring, Bank of America announced the Banc of America Marketplace, a suite of Internet financial services for e-commerce; Wells Fargo launched a network of Web-enabled ATMs, redesigned to optimize on Internet functionality; and BankOne announced The One Net Cross Border Payments(SM) to enable customers to transmit wires and drafts in foreign currencies using the Internet.
About Icarian
Icarian, Inc. is the market leader in Workforce Management solutions for streamlining the planning for, acquisition, deployment and development of employees in global organizations. Icarian Workforce(SM) utilizes the power of the Internet to bring workforce plans into alignment with business imperatives, dramatically slash time-to-hire through process automation and extranet connectivity with the talent supply ecosystem, and significantly reduce the costs associated with hiring and deploying talent. Privately funded, Icarian is located in Sunnyvale, CA. For more information, visit [www.icarian.com][1].
[1]: http://www.icarian.com/
